Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

March 9, 2023

WANdisco leaves the dancefloor

Macro & Overnight

There is media talk about the long-term decline in UK economic growth and our inability to attract listed companies to our stock markets.

The FT reports that senior UK fund managers are calling for deregulating pension and insurance funds to enable them to reallocate towards equities.

In Washington, Fed Chair Powell finished his last day of testimony by slightly rowing back on his previous hawkishness by saying the Fed remained data-driven and no rate decisions have been made.

Attention now shifts to jobs data releases later today.

China’s Peoples National Congress has approved overhauling its technology and financial services industry regulation. The Congressional session ends on Monday with further leadership appointments due to being announced.

 

UK Company News

WANDisco, the UK cloud data management company which revealed it was considering a NASDAQ listing only a few days ago, made a statement regarding suspected fraud within its sales process and has suspended its shares pending investigations into its financial position. Among other issues this raises, it is a blow to the image of UK PLC in a crisis moment regarding the UK’s standing in the world rankings of listing venues.  

Alfa Financial Markets, the consultancy services provider to asset management, expects to report full-year FY23 results significantly ahead of current market expectations. The Group continues to deliver good sales wins and has maintained its strong opportunity pipeline. It says it saw particularly good progress in North America. Alfa further proves that focused niche providers with global reach can still prosper in the UK market. 

Convatec, the healthcare company, issued FY results with over 90% of revenue now derived from chronic care categories. It also stated that it’s pleased with its simplification and productivity agenda. Results and current trading are consistent with its medium-term target. However, it expects inflation to remain a significant headwind in 2023. CEO Karim Bitar is making solid progress in reviving the fortunes of this disappointing PE-backed entrant to the market from a few years ago.  

Dominos Pizza issued FY results with like-for-like system sales up 13.9%. Its UK market share rose to 8.0% in Q4 22, up from 6.8% in Q4 21, with a record 18.5m orders. L4L sales have increased by 10.8% with the incremental benefit of being on the Just Eat platform. DP UK is trying to focus back on its UK core after making a costly reversal from its previous European expansion strategy.  

Chip designer Ensilica announced a placing and open offer responding to the contract momentum it sees in the semiconductor sector. 

In contrast, IQE supplier of compound semiconductor wafer products to the semiconductor industry, has experienced an acceleration of weaker demand leading to inventory build-up throughout the supply chain. This reduction in customer orders and forecasts will result in a decline of approximately £30m in reported revenues for H1 2023. It is expected to be temporary, and a return to year-on-year growth is anticipated in H2 2023. Ensilica and IQE’s contrasting fortunes reflect the semiconductor industry’s complex nature and underlying cyclicality. While an attractive growth sector, it isn’t easy to judge timing. 

Harbour Energy issued its first FY results as a listed company and launched a broadside against UK windfall taxation. It said, “the UK Energy Profits Levy, which applies irrespective of actual or realised commodity prices, has disproportionately impacted the UK-focused independent oil and gas companies critical for domestic energy security. Harbour, the UK’s largest oil and gas producer, has wiped out our profit for the year. This has driven us to reduce our UK investment and staffing levels.  Given the fiscal instability and outlook for investment in the country, it has reinforced our strategic goal to grow and diversify internationally.” 

Prognosticator 

 

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